Why Is NFT So Expensive And Some Worth Millions?

Physical or traditional works of art, such as paintings, are valuable precisely because they are unique or scarce. But digital files can easily be duplicated and shared endlessly on the internet. With NFTs or non-fungible tokens, art can be “tokenized,” to create digital scarcity or a certificate of authenticity of a property that can be bought and sold with cryptocurrencies.

In February of this year, an animated Gif of Nyan Cat – a popular internet meme from 2011 – was sold through the NFT Foundation platform for over $480,000.

Twitter CEO and co-founder Jack Dorsey sold as NFT, his “first Twitter tweet” through the Valuables platform, for $2.9 million.

Million-dollar NFT sales have also happened in similar worlds or virtual ecosystems, such as Decentraland. Earlier this year, an anonymous buyer spent more than $1.5 million on a virtual property or land on the NFT gaming platform Axie Infinity.

Big brands such as Taco Bell, Formula 1, NBA, MLB (Major League Baseball), Marvel, DC, and Nike have also entered the NFT space and launched blockchain-based products/services.

Digital tokens, or NFTs, are unique assets in the digital world and can represent ownership of anything in the real world, such as music, photography, video clip, image, or art. They are created and stored with blockchain technology – a shared digital ledger that records and stores all information in a secure and decentralized manner.

By essence, a fungible asset is a property that can be easily exchanged for another asset of the same kind, for example, money and Bitcoin (BTC).

One Bitcoin (BTC) will always equal one Bitcoin (BTC). You can also exchange a $100 bill for two $50 bills and it will have the same value. However, if a property or asset is not fungible, this is impossible – it means that this good has unique or exclusive properties, so it cannot be exchanged for something else.

A house or a painting can be a non-fungible asset, like the Mona Lisa, which is unique. You can take a picture of the Mona Lisa or even buy a print, but there will only be one original painting.

Most NFTs, or non-fungible digital art tokens, are usually based on smart contracts, which can give the artist or copyright owner, for example, a share of the proceeds from any future sale of the digital token.

What are NFTs and how do they work?

NFTs work as digital certificates of authenticity linked to unique digital assets. Powered by the same blockchain technology that powers cryptocurrencies like Bitcoin and Ethereum, NFT tokens serve as proof of ownership of a specific digital item (a PNG, MP3, or MP4 file), which helps verify its authenticity and allow buyers or investors to confirm its originality.

Because they are one of a kind or unique assets, they cannot be divided or broken down into smaller units as is the case with Bitcoin and can represent almost anything from artwork, an audio file, a video clip, photo, or virtual land or real estate to even online game currencies. No two NFTs or non-fungible tokens are the same, and this uniqueness and artificial scarcity is what gives them value.

Since most NFTs are based on smart contracts on the Ethereum blockchain, this allows an NFT or non-fungible token to store its data in the decentralized database, and this data includes all information about the NFT token or digital asset, such as the creator, complete transaction history of bids and offers, sales, new owner, and ownership records.

When someone buys a digital token or NFT digital asset, they are actually buying the “Certificate of Ownership” of the unique token, and the NFT smart contract allows the artist, owner, or copyright holder to receive a share of the proceeds from any future sale of the non-fungible asset or NFT. The royalty rate for an NFT can generally be between 3% -10% of future sales as commissions but depending on the rules of the NFT trading platform.

How much is a NFT worth?

It is difficult to determine the value of an NFT, this is because its price and value is based on what someone is willing to pay for it.

The reason why many artists have sold their artworks worth millions of dollars or for million-dollar price tags is precisely because people or collectors are not only after the art but also after making profits in the short and medium term.

What is the most expensive NFT in the world?

“Everydays: The First 5000 Days” by digital artist Mike Winkelmann better known on the internet as Beeple tops the list of the most expensive NFTs ever sold so far. This NFT artwork sold for $69.3 million at Christie’s first digital art auction on March 11 this year, marking the first time that a grand old auction house with over 255 years of history has sold a purely digital artwork.

Beeple has been creating and posting an image online every day since May 2007. “Everydays: The First 5000 Days” is actually a collage of over 5,000 of the images Beeple has created and shared on his social media over the past 13 years. With the NFT Everdays artwork, Beeple holds the label of having created the third most expensive work of art by a living artist ever sold at auction.

List of other most expensive NFTs ever sold so far

In addition to the work “Everydays: The First 5000 Days” which sold for $69 million, here are the other most expensive NFTs ever sold so far:

CryptoPunk #7523: $11.8 million

CryptoPunks or Punks have dominated the NFT art market with million-dollar sales in recent months. Sold by auction house Sotheby’s in June this year, Punk #7523, also known as Covid Alien, sold for over $11.8 million.

Of the 10,000 CryptoPunks, this is surely the most expensive Punk ever sold so far, making them a scarce collector’s item. This project was launched in 2017 by Larva Labs and consists of 10,000 8-bit 24×24 pixel characters. CryptoPunks were the first NFTs based on smart contracts on the Ethereum blockchain.

CryptoPunk #3100: $7.58 million

The second most expensive CryptoPunk on our most expensive list ever sold so far is Punk #3100, it is also one of the nine rare Alien Punks.

CryptoPunk # 7804: $7.57 million

This alien CryptoPunk is also one of the most expensive because it has unique features and attributes. With a pipe, cap, and sunglasses, this punk was sold in March to an anonymous buyer, a Twitter user. Since only 9 Alien Punks exist, its value comes from its rarity.

Crossroads: $6.66 million

Crossroads, another Beeple artwork, is actually a political representation. Accompanied with a short video of only 10 seconds, this NFT represents the defeat of Donald Trump in the 2020 US presidential election.

Why are NFTs so expensive?

As with physical collectible items such as trading cards, baseball cards, and other physical assets, there is a market for NFTs. The buyers or investors typically tend to be enthusiastic cryptocurrency individuals who understand the idea of wanting to buy NFTs or digital products and have probably made a fortune in the past with cryptocurrencies. Ether or ETH coin, for example, has gone from just over $300 last year to a current price of around $4,300. In some cases, buyers of NFTs are just adding more assets to their digital wallets to show how much cryptocurrency they own, but for other investors, there is a deeper interest.

By selling digital art directly to collectors through NFT marketplaces like Rarible, Foundation, OpenSea, and SuperRare, an artist can begin to better monetize their work without having to rely on gallery, store, auction houses, or museums.

Why are some NFTs so valuable?

NFTs or non-fungible tokens are essentially tokens in the new form of Digital Assets that can represent ownership of anything or art in the real world, from a work of art, trading cards, physical collectibles, music, videos, photographs, or anything digital such as a digital painting or drawing and gaming items.

In addition to Beeple’s “Everydays: The First 5000 days” art collection selling for $69 million dollars, many other artists such as PAK, have also made over $17 million from the sales of NFTs. This tells us that NFT is a very promising art form, and in the future, we may see NFT technology being used for many other things.

One example of this is the WePlay Collectibles, a project of NFTs that aims to create a community and unite true eSports fans and talent, as well as artists and digital art enthusiasts.

WePlay Collectibles are for people who want to be part of eSports events and show that they like players and talent in a different way, beyond merchandising. Now, WePlay Collectibles has become part of a platform, where you can buy items with NFT technology – not only physical and digital eSports memorabilia items related to a specific tournament, but also works related to contemporary art.

Find more information about the platform and NFTs at https://weplaycollectibles.com

Where can I buy and sell NFTs?

Besides buying NFTs you can also create and sell your own NFT. At Opensea NFT and Rarible, you can search and buy a variety of NFT assets, such as artwork, game items, domain names, and collectibles.

On the other hand, if you want to tokenize and sell NFT of your own artwork or any digital file, you can easily use NFTify, Shopify’s NFT store, to sell non-fungible tokens without having to write a line of programming code or create your own store. You will also need a MetaMask wallet to log in, buy, store, and sell NFTs.

Conclusion

The news and headlines of record sales of NFTs in recent months show no signs of slowing down. NFTs are here to stay and completely change the art world.